By Nikhil Sharma

May 26 (Reuters) - The index tracking Latin American assets strengthened on Monday as U.S. President Donald Trump's announcement he would postpone the deadline for threatened tariffs on the European Union reinvigorated investor sentiment.

MSCI's gauge for the region's equities .MILA00000PUS rose 0.7% on the day, following modest gains on Friday.

A parallel index for currencies .MILA00000CUS rebounded by 0.55%, after shedding 0.3% in the prior session, while the dollar index =USD remained under pressure from the previous week.

Trump on Friday unexpectedly called for 50% tariffs on EU goods, saying negotiations with the region had become too sluggish.

On Sunday, he pushed the deadline for tariffs to July 9 from June 1, after European Commission President Ursula von der Leyen said the 27-nation bloc needed more time to produce a deal.

"In Latam, we are taking all these announcements with a pinch of salt and we know that the volatility and uncertainty are still the name of the game," said Andres Abadia, chief Latam economist at Pantheon Macroeconomics.

"The situation can change dramatically from one day to another. So, just remaining cautious at the moment."

Brazil's real BRL= dipped 0.2% against the dollar. The country recorded a smaller-than-expected current account deficit in April, but also posted a narrower trade surplus.

Separately, data showed Brazilian consumers displayed some optimism in May, with the Consumer Confidence Index (ICC) rising by 1.9 points this month to 86.7 points.

The week is full of crucial data releases for Latin America's largest economy, including gross domestic product figures for the first quarter.

A poll conducted by Brazil's central bank showed economists hiking their forecast for 2025 GDP growth to 2.14%, up from the 2.02% forecast in the previous week.

This upward revision comes as the Central Bank of Brazil has stressed the need for a more restrictive policy amid persistent inflationary pressures and global uncertainties. The bank had raised its interest rates by 50 basis points earlier this month.

Sao Paulo's stock index .BVSP was up 0.2%, while Chile's main index .SPIPSA rose 0.4% - the top performer for the day.

Chile's peso CLP= rose 0.6%, boosted by higher copper prices. The country is the world's largest copper producer.

Mexico's peso MXN= was flat for the day, ahead of the release of minutes of its May monetary policy meeting later in the week.

The currency has gained about 2.2% so far this month, primarily boosted by elevated oil prices.

Latin America's broader currency index has risen 13.4% this year, with the parallel stock index soaring about 22%.

Trepidation over economic growth, unpredictable trade policies and fiscal risks, especially with Trump's spending and tax-cut bill, have revived the "Sell America" narrative, where investors are cutting their exposure to U.S. assets.

This has put the spotlight on emerging markets, where investors are aiming to build a more geographically diversified portfolio.

J.P. Morgan upgraded its rating on emerging market equities to "overweight" from "neutral" last week.

Meanwhile, trading volumes on Monday were thinner than usual as Wall Street markets were closed due to the Memorial Day holiday.

Key Latin American stock indexes and currencies:

(Reporting by Nikhil Sharma; Editing by Sharon Singleton)

((Nikhil.Sharma@thomsonreuters.com;))